"You shouldn't have to succeed despite Washington; you should be succeeding with a hand from Washington, and that's what you're getting now," Obama said at a White House reception.
"This plan does more to lay a new foundation for our cities' growth and opportunity than anything Washington has done in generations."
The economic stimulus package sets aside billions of dollars for highway construction, transit improvements, school modernization and community development block grants. Obama promised that the money would not be squandered or lost to graft and corruption.
"What is required in return is unprecedented responsibility and accountability on all our parts," he said.
"If a federal agency proposes a project that will waste that money, I will not hesitate to call them out on it, and put a stop to it," he added.
But, he noted, "I want everyone here to be on notice that if a local government does the same - I will call them out on it as well, and use the full power of my office and our administration to stop it."
The mayors have put together a "Ready to Go" report that details 18,750 local infrastructure projects in 779 cities that can be started as soon as the new funding is received.
The projects, which represent an investment of $150 billion, would generate 1.6 million jobs in 2009 and 2010, according to the report. They range from creating bridge guardrails in Bessemer, Alabama, to renovating elementary schools in Norfolk, Virginia.
Obama was joined at the meeting by Vice President Joe Biden, Attorney General Eric Holder, Housing and Urban Development Secretary Shaun Donovan, Transportation Secretary Ray LaHood, Energy Secretary Steven Chu and Education Secretary Arne Duncan.
The recession is severely straining cities' ability to meet their financial needs, according to a recent report from the National League of Cities. 84% of cities are reporting fiscal difficulties, the highest percentage since the group starting doing surveys in 1985.
The fiscal outlook for urban areas is expected to remain tough in 2009. The report found that 92% of the cities surveyed expected to have trouble meeting their needs this year.
To cope, cities are implementing hiring freezes and layoffs, delaying capital expenditures and instituting service cuts.
Sixty-nine percent of cities have instituted hiring freezes or layoffs, while 42% are delaying or canceling infrastructure projects.
Another 22% have instituted across-the-board spending cuts.
Cities are seeing their tax revenues decline as property values drop, shopping slows and unemployment rises. On top of that, nearly one in two city finance officers report difficulties in gaining access to credit and/or bond financing.
City finances tend to lag the overall economy by 12 to 24 months, the league said. The weakening economic conditions will be felt by cities through 2009 and likely through most of 2010, the league said.
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